Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

Piepkorn Manufacturing Working Capital Management

After completing the short-term financial plan for next year (at the end of Chapter 16), Gary Piepkorn approaches you and asks about the company’s credit policy, In looking at the competition, most companies in the industry offer credit to customers, so Piepkorn Manufacturing appears to be one of the few companies that doesn’t. Numerous customers have expressed the probability of altering to a different supplier due to the scarcity of credit. Gary is interested in knowing how implementing a credit policy will influence the short-term financial plan for next year. In addition, he would like you to inquire as to the probability of getting enhanced credit terms for the company’s purchases.

To analyze the probable switch to the new credit terms, Gary has asked you to investigate industry standard credit terms and rework the short-term financial plan supposing Piepkorn Manufacturing offers credit to its customers. He would also like to investigate how better credit terms from the company’s suppliers would influence the short-term financial plan.

problems

problem1. You have looked at the credit policy offered by your competitors and have determined that the industry standard credit policy is 1/10, net 45. The discount will start on to be offered on the first day of the year. You desire to examine how this credit policy would influence the cash budget and short-term financial plan. When this credit policy is implemented, you think that 60 percent of customers will take advantage of credit offer and the accounts receivable period will be 24 days. Rework the cash budget and short-term financial plan under the new credit policy and a target cash balance of $80,000. What interest rate are you effectively providing customers?

problem2. You have talked to the company’s suppliers regarding the credit terms Piepkorn receives. Currently, the company obtains terms of net 45. Your suppliers have stated that they would offer new credit terms of 2/25, net 40. The discount would begin to be offered on first day of the year. What interest rate are the suppliers offering the company? Rework your cash budget and short-term financial plan from the previous problem supposing you take advantage of the discount offered.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93668

Have any Question? 


Related Questions in Financial Accounting

1 assignmentthe following data in thousands of dollars have

1. Assignment The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year. Sales ........................................................... ...

Financial statement analysismy company is walmartpart

Financial Statement Analysis My company is Walmart. Part I • Perform at least one profitability ratio to measure the income and operating success of your selected company. • Perform at least one liquidity ratio to measur ...

Explain and analyze the external factors on or of

Explain and analyze the external factors on or of international business (e.g., political, legal, economics, culture, etc.) and how these may impact business.

Assignmentdataspan inc automated its plant at the start of

Assignment DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustme ...

Accounting - financial statement projectobjectivethe

Accounting - Financial Statement Project Objective: The project is meant to show your ability to analyze financial statements of selected companies in depth on a particular accounting method or standard. Submission: Hard ...

Assignmentthe kroger company reported the following data in

Assignment The Kroger Company reported the following data in its annual report (in millions).   January 31, 2015 February 1, 2014 February 2, 2013 Net sales $108,465 $98,375 $96,619 Cost of sales (using LIFO) 85,512 78,1 ...

Tracy company a manufacturer of air conditioners sold 100

Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2011. The units have a list price of $500 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/ ...

Assignmentaug 1 purchased merchandise from arotek company

Assignment Aug. 1 Purchased merchandise from Arotek Company for $9,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 4 At Arotek's request, Sheng paid $360 cash for freight charges on the Aug ...

Your project is halfway complete and your boss wants more

Your project is halfway complete and your boss wants more data to ensure the project will complete on schedule. You have been tracking EV, SPI and CPI and feel confident the project is on schedule. Your boss's gut feelin ...

Bad debt expense calculationsone of my classes a few terms

Bad Debt Expense Calculations One of my classes a few terms ago asked for an example or a bit better explanation regarding calculating Bad Debt Expenses. The following is what I have come up with. There are three basic m ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro